Summer Project on Real Est Page

7/29/2019 Summer Project on Real Est Page

1/55

INTRODUCTION OF REAL ESTATE SECTOR

India has experienced near-double-digit growth in the last several

years and stories of the Indian economic juggernaut fill newspapers and

bookstores. The commercial real estate market is no exception. The IT

boom has created a huge demand for quality office space that was

nonexistent a few short years ago. Several prominent Indian developers

have emerged, and more and more international investors and

developers are plunging into the country.

As with any local or regional market, there are many idiosyncrasies

that colour the business environment, and India is no exception. Below

is an introduction into the current conditions within the Indian real estate

market and what the future may hold as India quickly becomes a global

superpower.

1


2/55

Marco-economic Overview

The Indian economy currently stands among the world's fourth

largest growing economy in terms of purchasing power parity and holds

the distinction of being a key contributor to Asia's balance of payment

surplus. India's GDP is estimated to be the third largest in the world by

2020. India is also considered the second most attractive country in the

world for Foreign Direct Investment (FDI). Forex Reserves (excluding

gold and SDRs) stood at US$157.25 billion at the end of July 2006. India

now holds the fifth largest stock of reserves among the emerging market

economies and the sixth largest in the world.

2


3/55

The performance of the country has been consistent and steady

over the past three years with an average annual growth rate of 8%. The

growth trend is being led by positive movements across sectors in

agriculture, manufacturing and services.

In recent years, the broad based growth in services sector has

been a principle driver of the GDP growth. Business services (including

Information Technology (IT) and IT Enabled Services), communication

services, financial services, hotels and restaurants and trade

(distribution) services are among the fastest growing service sectors.

Indias share in the world market for IT software and services (including

BPO) increased from around 1.7% in 2003-04 to 2.3% in 2004-05 and

an estimated 2.8% in 2005-06.

3


4/55

The proportion of manufacturing in the GDP has remained stable

at around 25%, however, the growth rate of manufacturing has

increased over years, from 2.7% in 2001 to 9.0% in 2006 against the

growth rate of 2.3 % and 9.8% in agriculture and services respectively.

Manufacturing Industries like textiles, automobiles, cement, steel,

petrochemicals,

Infrastructure (civil aviation, roads, and ports), electronics,

beverages and tobacco products have been the prime drivers in IndiasIndustrial growth.

4


5/55

REAL ESTATE SCENARIO IN INDIA

The size of the Indian real estate market is estimated at USD 12

billion and it is currently growing at rate of about 30% annually. Realestate lending by banks has increased by 3.78 times in the last two

years, forming 18% of the total bank credit. Strong and improved

economic growth, proactive policy initiatives like relaxation of FDI in

construction and availability of finance (institutional and retail) has driven

the demand for real estate across all sectors - Commercial, Residential,

Retail and Hospitality. Also, there is an increased focus towards

development of Special Economic Zones (SEZ) in India.

5


6/55

The last few years have seen Indian market mature through

regulatory reforms (rationalization of stamp duties, reform of urban land

ceilings), improving products in terms of quality and technology,

changing tenant profile (MNCs, and respect for tenancy laws), and

improving management and maintenance models (enhanced product

life-cycles and sustained project / real estate yields). Although the initial

real estate boom was concentrated in places like Bangalore and theNational Capital Region of Delhi (including Gurgaon), more recently the

geographical spread has widened. There has been a significant shift in

real estate market from metros to its suburbs and to tier II and tier III

cities. Lease rentals and occupancies have been picking up steadily and

there is an increasing demand for quality infrastructure across various

segments of the real estate sector.

6


7/55

Commercial Real Estate

The demand for new office space in India has grown from an

estimated 3.9 million sq. ft in 1998 to over 16 million sq. ft in 2004-05.

70% of the demand for office space in India is driven by over 7,000

Indian IT and ITES firms and 15% by financial service providers and the

pharmaceutical sector. Cumulative demand for office space in India over

the next two years (2006-08) is estimated to be in excess of 45 million

sq. ft. The Indian IT-ITES Industry, estimated at USD 36.3 billion in 2006has grown at a CAGR of 36% over the last decade and by 2008, is

expected to account for over 7% of Indias GDP and 30% of foreign

exchange inflows. In 2005 alone, IT/ITES sector absorbed a total of

approx 30 million sq. ft and is estimated to generate a demand of 150

million sq. ft. of space across major cities by 2010. South Indian cities

like Bangalore, Chennai and Hyderabad along with NCR (NationalCapital Region) continue to attract the major share of IT/ITES and

business investment. However, secondary cities, like Pune, Chandigarh,

Indore, Kochi and Kolkata are now emerging as the new preferred

destinations for these companies due to their cost and infrastructure

advantages.

7


8/55

8


9/55

Residential Real Estate

The residential property market in India constitutes almost 75% of

the real estate market in terms of value. Low per capita housing stock,

rising disposable income coupled with easy availability of finance from

the housing finance companies and banks are driving demand in this

sector. Also, Average age of housing loan borrowers have decreased to

30- 35 years from 40- 45 years a few years ago, indicating a younger

buying threshold. The housing sector is currently growing at 30-35% per

annum. A proportion of demand is also being driven from investors who

view housing as an attractive investment option as compared to mutual

funds and stocks. The demand for housing is geographically widespread

with townships being built in both the metros and the tier II and III cities.

In India, there is a housing shortage of 19.4 million units out of which 6.7

million are in urban areas alone. This translates into very high

opportunities for investors in the residential sector.

9


10/55

Retail Real Estate

The Retail industry in India continues to be dominated by individual

small format stores with floor space of less than 500 sq.ft. Total number

of retail outlets is estimated to be around 12 -15 million, indicating a

retail density of 12-14 outlets per 1,000 people, which is one of the

highest in the world. The retail sector in India is currently estimated at

USD 230 billion. The current size of the organized retail activity is USD 7

billion, which is a mere 3% of the total retail market. The retail sector iswitnessing a growth of 5-7% per annum; however the organized retail is

poised to grow at a rate of 25% - 30% per annum and is expected to be

worth over USD 30 billion by the year 2010, thereby increasing the share

of organized retail activity from the current level of 3% to 15% in the

coming decade.

10


11/55

Hospitality Real Estate

Hospitality industry in India is growing at an annual rate of over

8%. The number of foreign tourists arrivals (a major driver of hospitality

industry) in the country increased to approx. 4 million in 2005. Over 55%

of the total demand for hotels in the country is generated by foreign

leisure tourists and business travellers (domestic and foreign). A large

proportion of lodging demand in commercial cities such as Bangalore,

Mumbai, Delhi etc. comes from business travellers.

This category also accounts for the major proportion of demand for

five star or five star deluxe hotels. However, against the total current

supply of 96,000 rooms, five star category accounts for just a quarter of

the supply. With the expected growth in demand for rooms at 18%,

another 65,000 80,000 hotel rooms will be needed till 2010. This

demand supply gap is expected to result in high level of activity in

construction of hotels. The established brands in this sector such as

Asian Hotels, Indian Hotels, ITC, Le Meridian etc are in expansion mode

with many new players such as Accor Group, Marriot, Choice, IHG

Group keen to establish their footprint.

11


12/55

Special Economic Zones

The upcoming realty trend in India after multiplexes and mega

housing projects are the Special Economic Zones (SEZ). Currently, 28

SEZs are operational in the country, including those converted from

Export Processing Zones (EPZ) to SEZ. Approx. 189 proposals have

already been granted approval since the SEZ Act, 2005 came into force.

These include SEZs in various segments such as multi-product,

Information Technology, Bio-technology, Gems and Jewellery, Textilesand technology intensive industries. Both developers and corporate

have shown tremendous interest in developing SEZs in the country.

Reliance Industries, for instance, is planning a 25,000 acre SEZ in

Gurgaon and is also the main partner in twin SEZs coming up at Navi

Mumbai and Maha Mumbai, with a combined size of 35,000 acres.

The Adani group is also setting up an SEZ at Mundra, covering

30,000-35,000 acres, and it proposes to invest Rs 7,300 crore on

infrastructure. Other corporate who are in process of setting up SEZs

include TCG Refineries of the Chatterjee Group (SEZ refinery at Haldia

in West Bengal), Suzlon Infrastructure (hi-tech engineering products and

services near Coimbatore in Tamil Nadu, Udupi in Karnataka and

Vadodara in Gujarat), Hindalco (aluminium SEZ at Sambalpur in Orissa),Genpact (IT SEZ at Bhubaneshwar in Orissa, Jaipur in Rajasthan and

Bhopal in Madhya Pradesh), Vedanta Alumina (aluminium SEZ at

Orissa). Seeking the permission for SEZs are also a number of real

estate developers, including DLF, Ansals, Omaxe, Parsvnath, Shipra

Estate and Sunny Vista Realtors.

12


13/55

FDI in Real Estate

With the opening of the sector for 100% FDI under automatic route, the

real estate sector is estimated to capture about 18-20% of the total FDI

coming to India in 2005-06. The FDI in Real

Estate is expected to have a favourable multiplier effect on the economy.

As an indicator, for every rupee spent on construction, an estimated 75-

80% gets added to the GDP. The spill-over effect of

this initiative can also be witnessed in important sectors like the cement

and construction industries, where the key players are expanding

capacity to meet the soaring demand.

With the relaxation of the FDI limit, the country saw an influx of global

real estate developers like Dubai-based Emaar Properties (the largest

listed real estate developer in the world) which enetered

India in a joint venture with Delhi based MGF Developments.

Growth and leverage to higher India growth

The real estate sector is developing rapidly in India. The demand side

has robust and sustainable macro drivers across all segments.

13


14/55

Residential:

Accounting for more than 70% of the sector in terms of space,

residential segment growth is driven by urbanization and the migration of

households up the income curve. According to the National Council of

Applied Economic Research estimates, the number of urban households

earning more than INR 500,000 (about US$12,000) should more than

double to 7.6m in 2006-10.

Commercial:

Rapid growth in IT/ITES services (manpower in the sector has doubled

in the past three years

to 1.6m) is the main driver of Grade A commercial office space demand.

Jones Lang LaSalle,

a property consultancy, estimates that the absorption of office space in

the top seven cities in

India was 31.1m square feet in 2006.

Retail:

According to CRIS INFAC, the penetration of organized retail into the

overall market will increase from 3.5% in 2005 to 8% in 2010, thereby

driving the demand for mall space.

Hospitality:

According to CRISIL, the number of 5-star rooms is expected to grow by

60% in the next four years with foreign tourist arrivals growing at 10%

CAGR.

14


15/55

Structure Of Real Estate

The real estate industry has historically been fragmented and

opaque, but this is changing:

Penetration of mortgage finance:

Mortgage disbursals grew by 38% in FY2001-06 and have become

an integral part of the buying process. This has helped reduce the

unaccounted cash component of transactions.

Entry of foreign capital:

Regulations governing foreign capital in the sector have been

relaxed, motivating developers to become transparent and improve

corporate governance.

Change in legislation:

In many states, strict laws like the Urban Land Ceiling Act (which

defines ceiling of land holdings in urban areas) have been repealed or

modified.

Consumer preferences:

Consumers are now willing to pay premium prices for betteramenities and a good brand. In response, most of the bigger developers

are scaling up geographically, which necessitates rigorous systems and

processes.

15


16/55

MUMBAI REAL ESTATEMumbai is no way behind when it comes to a talk on property. The

Mumbai real estate is in its growth orbit and attracts investors from major

multinationals in the recent times. Such is the potential of the city's

infrastructure that it is known to be spearheading most cities as far as

property market is concerned. With Mumbai serving as the

entertainment city, even the organized retail sector here is fastflourishing.

Purchasing real estate in Mumbai requires a significant

investment, and each piece of land in the city has unique features, so

the property market in Mumbai has evolved into several different fields.

Having the potential to leverage high returns, a large number of

real estate projects are financed everyday in Mumbai. NRIs can shop for

property in the city with the expectation of attaining an investment good,

or with the purpose of utilizing it as a consumption good, or both.

Mumbai is also the fashion capital of India, so it is one of the fore-

most cities to be hit by the retail buzz. With the opening up of the retail

market, there has been a growing demand for retail properties in Mum-bai. This has created a viable market for mall space and other retail

stores and showrooms. These retail stores and malls are either owned

by a business group or leased for hefty prices as the demand is high.

16
http://www.indianrealtynews.com/real-estate-india/mumbai-real-estate-price-trends.htmlhttp://www.indianrealtynews.com/category/real-estate-india/mumbai/http://www.indianrealtynews.com/category/real-estate-india/mumbai/http://www.indianrealtynews.com/real-estate-india/mumbai-real-estate-price-trends.htmlhttp://www.indianrealtynews.com/category/real-estate-india/mumbai/http://www.indianrealtynews.com/category/real-estate-india/mumbai/


17/55

The property prices as well as the increase in rental values in

Mumbai owe much of its credit to the large scale investments in the com-

mercial sector. Mumbai has always been the hot favorite for most of the

corporate sector to have their headquarters in the city. And with increas-

ing investments by MNCs in the IT, ITES and the BPO sector, there has

been a growing demand for office space; which have consequently cre-

ated an imbalance in demand and supply for residential properties. The

rental values in Mumbai have also in high corresponding to that in other

metros.

17


18/55

Navi Mumbai- Emerging Commercial Hub

Even Indias leading conglomerates have taken up commercial

space here. The state administration has already shifted wholesale com-

modity markets to Navi Mumbai. So, you have endorsements from differ-

ent segments that Navi Mumbais commercial real estate is much sought

after, he says. Suresh Haware, MD, Haware Builders concurs.

Even at the nano end of the commercial real estate spectrum,

demand is high, he says. It is the small offices and shops segment thathave witnessed the highest demand at Haware Builders commercial

projects in Navi Mumbai, he reveals.

Today, industrial units in Navi Mumbai are relocating to locations in

Raigadh district and commercial is the latest buzzword in Navi Mumbais

real estate scenario, says Vijay Gajra of the Gajra Group. Commercial

options in Navi Mumbai span a huge price band. Growth of the residen-

tial segment in Navi Mumbai, prior to that of the commercial segment,

actually works out in favour of the end-user today, as manpower re-

sources are easily available, he points out. Commercial real estate in

Navi Mumbai comes at competitive prices vis--vis other options in the

Mumbai metropolitan region (MMR), with the added advantage of being

located in a well-planned city, adds Gajra.

IT/ ITeS SEZs and businesses that have anything to do with

rail/road transport and logistics or shipping, are proving to be the next

big segment in Navi Mumbais commercial spectrum, shares Mayur

Shah, honorary secretary, MCHI. Ramneek Bakshi, principal of global

property consultants, LJ Hooker, points out that MNCs view India within

the parameters of the Brazil, Russia, India, China (BRIC) equation.

18
http://www.indianrealtynews.com/real-estate-india/mumbai/navi-mumbai-emerging-commercial-hub.htmlhttp://www.indianrealtynews.com/category/real-estate-india/mumbai/http://www.indianrealtynews.com/real-estate-india/mumbai/navi-mumbai-emerging-commercial-hub.htmlhttp://www.indianrealtynews.com/category/real-estate-india/mumbai/


19/55

When they look at India as a business entity, Mumbai takes prime posi-

tion. When they start looking out for space, Navi Mumbai, which forms

the third level of real estate pricing, is attractive for MNCs looking to set

up shop in the Mumbai region, he explains. At the Norwegian consulate

in Mumbai, George Mathew, honorary consul general, concurs, If you

look at real estate pricing trends in the MMR, Navi Mumbai fits the bill on

many counts. However, the clincher is the price efficiency and developed

infrastructure that Navi Mumbai provides, he concludes.

19


20/55

Appreciations

The hike in demand as well as supply and appreciation in capital

values are attracting good attention from overseas investors. The

Mumbai real estate has become a reflective of the high growth in Indian

property market. There has been an increase in real estate value across

micro markets in Mumbai as well.

Mumbai is looked upon as one of the most organized and

transparent property market in India. With cash components and

transactions shooting up in the last two years, the city has gained much

popularity among the investors, both domestic and international. The

investment market has been thriving with excellent returns going high

over the past few years. The real estate boom and an upsurge in

development activities in major parts of Mumbai have led to a rise in

investment prospects in commercial and residential sector.

Known locations like Bandra-Kurla Complex (BKC) and Lower

Parle have seen appreciations in commercial spaces falling under the

category of Grade A. The occupancy levels in other preferable locations

like Andheri West and Nirman Point also increased in the current yearand are believed to have marked the rise by 90-95%. Another mark

appreciation is in regard to commercial properties in Mumbai, and is

prevailing in the city's micro markets barring a few exceptions.

20


21/55

NRI Real Estate trends

Major property developers in Mumbai, underpinned by the

vastness, scope, success and scale of progress in the city are now

transforming developing properties into strong retail bases. Then of

course, the government permitting foreign direct investment (FDI) up to

51% in retail trade has also brought about major moves in retail industry.

The demand for property whether commercial or residential, is

very high in Mumbai. There has been steady demand for consecutive

years and has resulted in an increase in the yield rate. New real estate

projects in Mumbai are always in queue to be launched by private as

well as by government. This encouraged overseas investors especially

Non resident Indians (NRIs) to make significant investments in Mumbai

properties.

With an excellent accessibility across the globe, the city of dreams,

Mumbai has emerged as an ultimate destination for most people. As per

property surveys, one can sell any property and get a price which is fairly

good. Within the real estate industry, it is believed that such periods

come in cycles and bring an apt time to cash upon.

What makes real estate in Mumbai so exciting are an ongoingdemand and the proposed projects that are to be executed in

approaching years. Builders always have special offers and attractive

schemes in store for end consumers. Capital Values of quality

apartments, in well-maintained old buildings and upcoming projects, in

South and South Central Mumbai, have gone through the roof

21


22/55

Agency

Agency is that branch of the real estate business which engages

the attention of the greatest number of persons who are concerned with

the business, and in that respect it is of prime importance. It is divided

into two parts, brokerage and management.

A broker is a person who for compensation, usually proportioned

to the value of the subject-matter, brings about transactions between

principals.

Brokerage has two divisions according to the kinds of business

which usually engage the attention of the broker.

The sales broker is a broker who devotes his time and attention to

the bringing about of the sale or exchange of real property.

A loan broker is one who gives his attention to the obtaining of

loans upon the security of real property.

One man may practice both branches of the business, or a spe-

cialist may devote himself to either of these branches.

Management, the second branch of agency, is the operation of de-

riving income and caring physically for real estate structures. It concerns

itself not only with the deriving of income, but with the keeping down of

expenses and the care in making expenditures. It is popularly known as

"Agency."

22


23/55

COMPANY PROFILE

ALLIANCE PROPERTY SERVICES PVT. LTD .

Regd Off: 20/3, Vandana Bldg,

R.A. Kidwai Road, Wadala,

Mumbai-400031.

Administrative Office:

Vashi Plaza, Ground Floor,

Sector 17, Vashi,

Navi Mumbai- 400705.

23


24/55

VISION

Benchmarking our services in terms of People, Pace & Passion to

be the best in the Industry.

MISSION

To provide creative solutions, by customizing our services to suit the

requirements of our clients. To encourage & facilitate our team to

reach its optimal potential combining its diverse strengths to providetotal customer satisfaction.

Background

They started as a journey by a single individual with a desire to

excel has now become an organization which is serving the needs of the

real estate industry in the country today.

Alliance today has the best talent on its board of directors who are

professionals in real estate, finance, accounting and taxation striving to

render the best of services to its clients. Alliance today has given shape

to and has structured some of the most complex and landmark

transactions for reputed clients.

They add value to your properties through their experience and

expertise, with their wide network of clients and contacts all over India

and global arena. They assist everyone in identifying opportunities and

the right partners to compliment their capabilities.

24


25/55

Business Segments

Approach

Our services help clients to achieve value addition by turning as-

sets into dynamic assets and realize the best potential of each asset

and try to optimize by putting each asset to its best possible use.

BUSINESS

SEGMENTSManagementconsultancy

Franchising

Financing

RealEstate

25


26/55

Projects Handled-

Little World Mall:

They had sole mandate to lease the mall which started in October

2007 in Kharghar. Complete project was completed by them with good

anchors and brands as listed below:

Aditya Birla more, Archies, Levis, Levis Signature, Max Lifestyle,

Adlabs, The Raymond Shop, Reid & Taylor, Welspun,Thomas Scott ,

Connexions, Koutons, Planet M, The Mobile Store, Homes & Apparels,

Lilliput, Carmicheal House, Kittens, Thomas Scott, Gini & Jony, La

Diamond, Nice Looks, Dosa Plaza, China Land, Chopking, Indian

Tadka, Moti Mahal, Caf Energise, Caf Bollywood, Kwality Swirls Juice

Zone, Namrata Cup Corn.Curries and Parathas.etc

City Center Mall:

They have leased Operational Mall on Palm Beach Road, Vashi. The

list of brands which we introduced to this mall are:

Levis, Roop Sangam, Kittens, Gini& Jony, La Diamond, And Design,

Adora, M&B Shoes,Black berry, Weekender, Infancy,Timex, GKB

Opticals, Black Berry, ITC John Player, Unistyle, Addidas, Nike, Spykar,

Lee Cooper, Ruff Kids, L effect, Live In, Lovable, Dominoes, Nice

Looks, Top Corn, Caf Coffee Day, Ameoba Game Zone, Stone age

Restaurant.

26


27/55

Other Individual Projects Handled:

Brokerage deals:

Crystal Mall- Bandra & Mumbai Times Caf

Reliance & Maithili Signet at Vashi.

Kstar Mall Chembur Aditya Birla More

Fantasia Mall-Inox (Multiplex)

Bank Finance:

Arrangement for Akshar Developers from Axis Bank

Arrangement for Wellwisher Constructions from Axis Bank

FDI investment for Little World Mall.

Etc,.

Quality Objectives

Continuous improvement in the quality of services.

Prompt response to customer complaints

Strong property data bank.

Aggressive follow up & due diligence.

Panel of associates for legal, finance, market research, invest-

ments and other allied subjects. Handling properties in all metros and all other cities across the

country.

27


28/55

An Overview

Alliance Property Services is professionally managed company

having presence in Mumbai, India in the following activities:

1. Real estate Sale and lease.

2. Lease of retail outlets in malls and High street.

3. Joint ventures with developers.

4. Leasing and sale of entire properties with High Value clients.

/Builders/Investors/Private equity /Venture capital /Foreign Direct

Investors.

5. Franchising in retail and other spheres.

6. Arranging attractive investment proposals/ideas for investors.

7. Holding real estate/franchising /retailing /financing expositions and

exhibitions in all towns and cities.

8. Finding investors for local developers and Builders.

9. Underwriting entire projects for marketing ,investments and execu-

tion.


29/55

Corporate Real Estate Services

Transactions for all kinds of properties across the country including:

Residential

Office

Commercial

Retail & Shopping Malls

IT Park

BPO/ Call centre

Hotel & Resorts

Leisure & Entertainments

Hospitals

Multiplexes

Industrial

Institutional.

Advisory Services:

Investment Advisory Services

Third Party Due Diligence & Service Management

Feasibility Analysis Lease & Utility Audits

Relocation Studies

Property Valuation & Tax Consulting

Site Selection Modeling Analysis & Strategic Planning

Merger and Acquisitions

Joint Venture, Collaborations, Franchise


30/55

Foreign Direct Investment (FDI)

Allied Services:

Valuation and Land Appraisal

Tenant / Purchaser Representation

Research & Feasibility Studies

Project Management

Bank Finance: Preparing project and feasibility report, Bank Turn-

key Financing Solutions

Value added Services

1. Turn Key Projects : Lessoning for Approval

a) Central Govt. of India

b) State Govt. of Indiac) Local Govt. and Municipal Corporations

2. Joint Venture with Best Indian Realtors for Multinational Compa-nies.

3. Office Buildings and Houses for Company Management.

4. Project Management Consultancy Services.

5. Design, Architect, Marketing, etc.

6. Local Assistance for Site Development / Construction.

7. Global Partnership with leading realtors overseas for IndianRealtors.

After achieving a reasonable success in Mumbai and Navi Mumbai, they

are now planning to have branches and associate offices in all cities and


31/55

Tier 1, 2 and 3 towns of India as well as all the parts of the world. They

would be willing to start a no commitment tie-up with organizations.

MY PROFILE IN ALLIANCE PROPERTY SERVICES PVT. LTD.

Projects Handled:

CENTURION COMMERCIAL

& SHOPPING COMPLEX

Plot No 88-91, Sector: 19A,

Nerul (East), Navi Mumbai.

HAWARES FANTASIA

BUSINESS PARK

Plot no.47, Sector-30A,


32/55

Vashi, Navi Mumbai.

HAWARES VASHI IN-

FOTECH PARKPlot No. 16, Sector 30A,

Vashi, Navi Mumbai.

HAWARE INFOTECH PARK

Plot No. 39/3, Sector 30A, Opposite

Vashi Railway Station, Vashi, Navi

Mumbai.


33/55

LOAN DEPARTMENT

As centurion shopping complex is a vast project, it consists of

more than 500 shops and offices. The customers come for the

investment as well as to start up their own business. The customers are

basically heterogeneous in nature. Out of which few of the customers

were willing to give the total cost of the shop/office as their 100% own

contribution within the specified time period. But when analyzed that the

customers were not financially stable after going through their

documents, they were given the option of commercial bank loan

according to their requirements.

Marketing executives were appointed to approach different banks

and were asked to give the detailed view of our shopping complex.

Every week a meeting would be held between the trio to discuss the

various factors and schemes regarding the particular bank. As to know

what are the different rates of interest been levied , and many other

factors. Most of the banks do not support the commercial loan as it

involves very high risks and suspicions. Whereas there are banks with

whom we had tie-ups. They are:-

Mahanagar Co-Operative Bank

HDFC Bank

ICICI Bank

Saraswat Co-Operative Bank

Deutsche Bank

Abhyudaya Bank, etc.


34/55

We as the intermediary would collect the required document from the

customer. The bank then verified the documents and declared whether

the customer is liable to repay the loan taken by them. Within this period

we had to follow up with the bank and customer for paying 40% of their

agreement value. Customer should pay their 40% and complete with

registration before bank proceed. Banks are able to provide up to 60%-

70% loan according to customer profile.

At the time of registrations we are required to provide instruction tocustomers regarding registration. Following instruction were to be

provided by us :

1. Customer have to bring Rs.3500 with them at the time of

registration for printing and stamp duty chargers.

2. Customers current 2passport size photocopy with pan card Xerox.

3. It Requires 2 witnesses also from the clients side.

4. 5% stamp duty 1%registration paid by customer on Agreement or

Market value whichever is higher.

5. The agreement is to be done on agreement or market value

whichever is higher. Market value is to be calculated by following

formula:

Build up Area = Carpet Area + 20%

Market Value = Build up Area Rate Per Square FeetX


35/55

COLLECTION DEPARTMENT

The collection department is the main hub in this business unit,

wherein the money is collected from the customer after the booking is

done. The customer can officially book the shop only after paying the

token amount. The token amount varies with respect to place and

project. The customer details are jot down in the booking advice. This is

done in order to ensure that the follow up of the particular customer isdone and also to keep a check i.e., that customer should pay the latter

half of the remaing amount within the time limit. The follow up mainly

helps in maintaining essential records which is in Microsoft Excel format.

It is made sure that the database is up to date at any given point of time

so as to maintain the flow of the various activity related financial

transaction. If the customer fails to repay the amount on time, as a

penalty he/she liable to pay the interest on the remaining amount.We

are there to keep keen observation on every individual account. We had

to report to Mr.Rajesh Ruparel about the full weeks detailed data in

order to give him the current scenario of his project.


36/55

Example:

Mr. A came to the site for seeing the shop and buying it to start his

own business. We gave him a fair view of all the shops available with us,

the cost and size of the shop varied differently. The cost of the shop was

dependent upon floor wise also. We had G+3 floors. Among which

ground floor was the most expensive one.

After going through our shops Mr .A decided to purchase shop at

first floor. Then we took out our booking advice which had to be filled by

us which carried all the information pertaining to the client. After filling

the booking advice, we took the token amount which had to be more

than Rs.11000/-. Suppose Mr.A purchases shop in Centurion project,

Nerul on first floor. First process is to fill booking advice.

Booking advice includes:

Name of customer:

Address:

Date of booking:

Mobile number:

Office Number:

Residential Number:

Sq Ft area:


37/55

After filling the booking advice, it will go to Hawares head office,

Vashi for confirmation. When the booking goes to the head, the shop is

confirmed for that customer till registration. After registration, legally, that

shop will be transfered to Mr.As name.

At the time preparing booking advice Mr.A decided to pay their

50% amount within 15days as per their requirement and their condition,

for remaining they required bank loan. So we have to keep contact with

Mr.A and remind every time about payment, recorded all payment detail

in excel sheet wherever payment is made by Mr.A . Within 15 day Mr.A

paid their 50% amount.

Mr.A Purchased on 9 May2009, 212 sq. Ft., on first floor as per

demand at that time per square rate was Rs.6,000. Therefore total cost

for Mr.As shop is Rs.12, 61,000/-. While booking, Mr.A gave Rs.11000/-

as a token money in cheque.

Following is the excel sheet which is prepared and maintained

daily if any customer paid any amount that will added into total received

column every time. There is one more sheet was their is which

PDC(Post Dated Cheque) is to be maintained. If Mr.A gave PDC of

Rs.1,00,000 for 12th may 2009 then it will recorded in PDC sheet, and on

12th May when cheque will clear we have to added that Rs.1,00,000 into

Mr.A account after conformation.


38/55


39/55


40/55


41/55

Mr.A completes their 50% payment within 15days. If it could not

possible from Mr.A then they are eligible to pay interest on their

remaining amount. Mr.A required loan on remaining 50%. So within

15days when Mr.A was paying their part of payment we contact with our

bank and fulfil all requirement of bank.

Firstly bank required following document from customers side :

If business man then 3 years Income tax returned filed,if

service men then form no.16 from and 3 years salary slips.

Last 1 years updated bank pass book copy.

Residential proof :- Electricity bill, Pan card Xerox,

2 photograph

Agreement and register document.

Estimated 5 years projected balance sheet some bank

required

Every bank has different criteria for different customer. Co-operat-

ive bank like Mahanagar Co-Operative Bank, Abhyudaya Bank,

Saraswat Co-Operative Bank provided loan only to businessmen not forservicemen and not NRI person. Only businessmen are eligible for their

requirement. And banks like ICICI, HDFC etc. provide loan to business-

men as well as NRI and Servicemen. Servicemen should have net salary

more than Rs.30000.


42/55

Rate of Interest is also differing from banks to banks. Co-oper-

ative bank have less interest compare to nationalised bank. Rate of In-

terest for commercial loan is between 12.5% to 14.0 %. Banks also

charger processing fees and charger for pre-payment. Processing fees

also differ from bank to bank between 0.5% to 1.0%.

It took 15days to provided loan to Mr.A after providing every

document which is required.


43/55

SELLING & MARKETING DEPARTMENT

The ultimate aim of any real estate marketing is to increase the

demand for a particular type of property and to increase the price so that

the seller of the property owns the highest amount of profit for himself.

The real estate marketing is required to make the Real Estate project

work and make it familiar among the public as much as possible. Most of

the real estate sellers keep an amount aside just for their real estate

marketing and on that basis they choose certain real estate marketing

agents and give them the responsibility to sell their property off with as

much profit as possible. If the sellers budget is big enough then he can

go for renowned real estate marketing agency and for those with small

budgets the smaller agencies are also available. Most of the big real

estate owners who want to sell their properties prefer to go for big

marketing agencies as they have better ways to promote one's

properties and have able agents who can find the right kind of agents

working for them who have better contacts and have better ways to

popularize the real estate property.

A good real estate marketing agency always puts special

emphasis on the right kind of information that one needs before starting

real estate marketing and for that the agency normally conducts some

kind of survey to gather the right kind of information. Later the real estate

marketing agency, depending on that report, develops their ways of

marketing.


44/55

Nowadays a lot of Real estate marketing is done through the help

of the Internet. One can have various websites that do marketing for

different real estate properties for a certain amount of money. One also

needs to make the website precise and filled with to the point

information. The real estate internet marketing is a very simple process

and is cheaper in nature as well. Although one needs to keep the

demands and the reasonable amount of price in mind.

I was functioning under operational projects of Alliance Property

Services for Hawares Commercial Projects namely -

Centurion Commercial & Shopping Complex, Nerul

Vashi Infotech Park, Vashi

Haware Infotech Park, Vashi

Fantasia Mall, Vashi

I also handled a residential project at kharghar- BLISS by Sacho

Satram group.

In marketing, Promotional strategies used were-

Newspaper advertisements

Visual media ads in local cable channels

Direct Marketing(door-to-door) in commercial complexes

Through www.propertyworldmart.com.


45/55

Business cards can either be a waste of paper or an effective bridge

between a prospect and their potential as a long-term client. So, follow-

ups of all the business cards that were dropped in at the site office were

done on a daily basis.

Brokers & agents were also approached to get their clients for the

deals. Telephone & Email follow-ups also formed a part of my job. There

was face-to-face interaction with the customers for the sale of

shops/offices by convincing them to buy.

Customer database was also maintained considering various heads

like- Date of purchase, Shop/Office no., Name of the customer, Area of

the shop/office in sq.ft., Total value of Shop/office in Rupees, Total

Received(cash/cheque) and Balance amount.


46/55

ADVANTAGE FOR REAL ESTATE AGENT :

10-Year Tax Holiday

The finance Ministry has announced a 10-year tax holiday for developers

of Industrial parks set up from April 1, 2006 to March 31, 2009. Accord-

ing to the Industrial Park Scheme 2008 notified by the Central Board of

Direct Taxed (CBDT), the industrial park developers will be eligible for

100% tax deduction which is to be provided for 10 consecutive assess-

ment years out of 15 years after the commencement of operations of

such units. The developers will be free to choose the 10 consecutive

years for the purpose of availing themselves of the tax holiday.

Price Variations in India

There are unbelievable variations in the prices of real estate sector in the

past. Which mainly affect to the sale of business. Mainly there are two

causes for the same:

Per Capita Income

GDP at Market Price


47/55

Per Capita Income

As depicted by fig. 2 per capita income is increasing in India, which has

increased the purchasing power of the people. Due to this over the last

year (2006-07) houses prices have raised by 10-90% and commercial

property prices by 10-30% in different area of India. Correlation .996 is

found between PCI and real estate prices. Thus there is a positive corre-

lation between per capita income and real estate prices.

GDP at Market Price

GDP, the indicator of the national growth, from the past 2-3 years is in-

creasing by 6.5% to7.5%. Every rupee spend on the construction add to

nearly 60% of GDP. As shown by the figure the GDP has increased from

the 2463324 crore to 3529240 crore from 2002-03 to 2005-06, so it indi-cates that how the spending on the construction sector helps the real es-

tate prices to increase.


48/55

Price Variations in Different cities:

Price variations in Mumbai

Price variations in Delhi


49/55

Price variations in Pune

Price variations in Kolkata

It is clear from the above tables that in real estate prices are touching

heights. In some areas the prices are increased by 90-100%. In Gur-

gaon and Noida prices has jumped by as much as 200%. The cheapest

DLF apartment in Gurgaon costs Rs. 1 crore.


50/55

Clear Title

90% of the lands in India do not have clear title. The ownership is un-

clear, thereby creating a scarcity of land. This is due to poor record

keeping and outdated complaint processes. All updated records must be

computerized to increase transparency in land ownership. And special

fast track courts must be set up to clear all legal land disputes in a short

period of time.

Stamp Duty & Registration

The cost of transferring land titles must be reduced from rates of 10%

stamp duties to reasonable levels of 3 to 5%; similar to prevailing rates

in developed countries. This will encourage sellers to pay stamp duties,instead of trying to cheat the government, thus increasing the revenue

for the country. The high duties have also encouraged unaccounted

money being used in most real estate transactions in India. The registra-

tion procedure should also be made transparent and simple so that cor-

ruption can be minimized.

Building Codes, Standards & Permissions

There are several building guidelines and standards in various cities and

states, however they are neither followed by the developers nor imple-

mented by the authorities.


51/55

Development and Planning

In India development and planning concerned with real estate sector is

not up to the mark. The city or state authorities must use professionals to

plan and execute all development plans for cities and towns, with future

development in mind. This must be done without political compulsions.

This will allow proper zoning within cities and towns, green areas and

other infrastructure systems to fall into place as the development plans

unfold.

Present Scenario in IndiaUp to the end of 2007 real estate sector in India was growing at a very

high rate. There was a situation of boom in this sector. The home loans

were easily available and RBI was following very liberal policies regard-

ing the interest rates. But in 2008 the things are changing due to the

high rate of inflation in the Indian economy. There is uncertainty in the

market as share market is showing depression and the RBI is also in-creasing the Bank rate leading to the increase in the interest rates. So

the buying power is reducing. The major reasons for this downfall are in-

flation and the low rate of GDP.


52/55

Findings

As the GDP increases the real estate prices also increases because

there is a high degree of positive correlation between the real estate

prices and GDP.

Real estate prices also increases with increase in the per capita in-

come as there is high degree of positive correlation between these two

also.

The infrastructure of India is also growing day by day so it adds to the

better facility to different sectors which affect the real estate prices.

The FDI into the country affects the real estate FDI and real estate hav-

ing a positive correlation leads to the boom in this sector. Increase in FDIfrom 2006 to march 2007 is 10%. Earlier it was 16% and now in 2008 it

is 25%.

The interest rate also affects the real estate prices because it affects

the lending and borrowing by the investors.

The growth in the real estate sector is between 25-30% in a residential

sector, 10-15% in commercial sector and agriculture sector. Housing sector constitute 80% of real estate in terms of value and 20%

by commercial sector.

In residential segment, availability of easy home finance and rising pur-

chasing power has driven the growth. Builders are launching high-end,

life style residential products to cater to the growing bunch of high net

worth individuals.


53/55

In 2008 the growth of real estate sector is going down due to high infla-

tion and hike in home loan rates by the banks following the increase in

bank rate and SLR by the RBI

The outsourcing and IT/ITES industry have contributed to the demand

for quality office-space. The estimated demand from IT/ITES sector

alone is expected to be 150mm sq. ft. of space across the major cities

by 2010.


54/55

Suggestions

The following recommendations are made this paper-

Due to high prices the lower income group is not able to purchase the

shops, so company should take kept in mind to protect the lower income

group.

The agriculture land covered into the commercial and residential pur-

pose. But the population is also increasing day by day. So company

should steps for the same.

The investors should analyze the type of project in which they are go-

ing to invest and the potential returns from it.

Privatization of Airports and ports needs to be speed up. There is a lack of proper data and management of the real estate sec-

tor so company should take the corrective steps in this regard so that the

proper estimation and management of the real estate can be made pos-

sible.

Commonwealth is scheduled for 2010. Hotels, sport stadiums and oth-

er infrastructure to have successful games need to be expedited. This isanother great opportunity for foreign developers and investors to step in

India. Thus more and more encouragement should be given to foreign

investors.

Stamp duty is extremely high and must be rationalized and brought

down to 2-3% as per global practice, which is now in India varies from 5-

6%.


55/55

Due to lot of investment avenues in real estate in India, fraud cases are

also increasing day by day like in Delhi deconstruction of buildings. Thus

careful measures and laws should be enacted to deal with these types of

situations.

Conclusion

After studying all the factors of the real estate it can be concluded that

the Real Estate is a very wide concept and it is highly affected by the

macro-economic factors like GDP, FDI, per capital income, Interest rates

and employment in the nation. The most important factor in the case of

Real Estate is location which affects the value and returns from the Real

Estate. India needs a stronger capital market base for property financ-

ing. The debate on the potential introduction of REITs and real estate

funds points in the right direction. The introduction of REIT s in 2007, willgive international investors in particular a familiar investment vehicle. Pri-

vate investors could also enter into indirect investment in real estate. Al-

though interest in new projects is most likely to come primarily from insti-

tutional investors, the rising middle class is likely to seek new instru-

ments aside from direct property investments in the medium term. So, in

the end we can say that the investment in Real Estate in India is a verygood investment opportunity. But one should be very careful while taking

decision in this direction due to rising inflation and interest rates. Legal

issues should also be kept in mind while choosing a property.

Summer Project on Real Est Page

Documents

Transcript of Summer Project on Real Est Page